NEW DELHI: The Supreme Court on Friday issued a notice to the Centre, seeking an explanation within eight weeks on the alleged misallocation of coal blocks, a development that can provide more muscle to the Opposition's protests.

The apex court rejected the Centre's plea that it should not hear a public interest litigation on the Comptroller and Auditor General's report, which has pegged potential loss to the exchequer due to the government's failure to go in for competitive bidding for coal blocks at Rs 1.86 lakh crore and which is being examined by the Parliament's Public Accounts Committee.

"The petitioner has sought to point out illegality and there is nothing wrong in it," a bench comprising justices RM Lodha and AR Dave said. "This is not distribution of state properties in a small way.

It is mines of largesse not even tons of largesse," the bench observed, before asking solicitor-general RF Nariman, "By the way, is it a mere coincidence that so many politicians, their relatives or supporters were benefited in the 194 coal block allotments?"

In his PIL, advocate ML Sharma has requested SC to cancel 194 coal blocks allotted to private companies in Jharkhand, Chhattisgarh, Maharashtra, West Bengal, Odisha and MP on the grounds that the allotment process was arbitrary, illegal, unconstitutional and against the public interest.

Though the government has been denying charges of perpetrating crony capitalism and favouring relatives of politicians, the Opposition has closed ranks to demand cancellation of allocations and a judicial probe.

The bench asked the coal secretary to file an affidavit on seven issues, including the policy guidelines formulated by the government for allocation of coal blocks; the actual process adopted by the government in allocation; whether the guidelines contained a built-in mechanism to ensure that allocation of coal blocks did not lead to distribution of state largesse unfairly in the hands of few private companies.

The court has also demanded to know whether the guidelines were followed for allocation of coal blocks in letter and spirit and whether the objectives of the coal allocation policy had been fully achieved by the manner in which 194 coal blocks were allocated.

The government will have to explain what the grievances were for not implementing competitive bidding process for allocations and what steps were taken or were proposed to be taken about allottees that have not adhered to the terms and condition of allotment or have been found to have breached them.

During the hearing, the Supreme court also rejected the government's contention that the Public Accounts Committee was the right forum to debate the CAG report.

"We are not on the correctness of the CAG report. But will it be wrong for a petitioner to rely on the CAG report to question the correctness of government's action?" the court asked the Solicitor General.

"The question before the court is two-fold - whether there was illegality in the allotment of coal blocks and what action is to be initiated under criminal laws?

We are sorry. There PAC's exercise on the CAG report is different from the court's process. We do not want to encroach into PAC's exercise. This is a matter which requires explanation from the government."